FA Tutorial 2 Lecture 5 (3)

Jul 17, 2026

Uploaded by Asher

Sales tax and discount accounting scenarios require computing invoice gross values and determining settlement entries under trade discounts, early settlement (cash) discounts, and standard credit terms. The exercises cover cases where customers pay within or outside discount periods and where sales prices may be tax-exclusive or list-price based, affecting the sales tax calculation and gross invoice amounts. Additional transactions track purchases, sales, cash and non-cash withdrawals, settlements, inventory, and then require ledger postings, a trial balance, a profit or loss statement, and a financial position as at 30 November.

LanguageEnglish

CategoryExam

FormatPDF

Pages2

Reading Time5 min

AccessFree to download

1. Erin is registered for sales tax. During May, she sold goods with a list price of $600, excluding sales tax, to Kyle on credit. As Kyle was buying a large quantity of goods, Erin deducted trade discount of 5% of the normal list price. If sales tax is charged at 15%, what will be the gross value of the sales invoice prepared by Erin? 2. Eric is registered for sales tax. During October, he sold goods with a tax exclusive price of $800 to Kevin on credit. As Kevin is buying a large quantity of goods, Eric reduced the price by 8% . Eric accounts for sales tax on all transactions at 25% . What was the gross value of the sales invoice for Kevin prepared by Eric? 3. XYZ Co sold goods with a list price of $2,000 to AliCo which was subject to trade discount of 15% and early settlement discount of 6% if the invoice was paid within 5 days. The normal credit period available to credit customers is 30 days from invoice date. AliCo has never taken advantage of early settlement terms and has always paid after 30 days. If AliCo subsequently pays within 5 days and is eligible for the settlement discount, what accounting entries should be made by XYZ Co and AliCo to record settlement of the amount outstanding? 4. XYZ Co sold goods with a list price of $800 to EviCo which was subject to trade discount of 10% and early settlement discount of 5% if the invoice was paid within 6 days. The normal credit period available to credit customers is 30 days from invoice date. EviCo always takes advantage of early settlement terms. If EviCo subsequently pays within 6 days and is eligible for the settlement discount, what accounting entries should be made by XYZ Co and EviCo to record settlement of the amount outstanding? 5. XYZ Co sold goods with a list price of $9,500 to Eddie which was subject to trade discount of 50% and early settlement discount of 4% if the invoice was paid within 15 days. The normal credit period available to credit customers is 30 days from invoice date. Eddie has always taken advantage of early settlement terms. If, on this occasion, Eddie does not pay within 15 days and is not eligible for the settlement discount, what accounting entries should be made by XYZ Co and Eddie to record settlement of the amount outstanding? 6. XYZ Co sold goods with a list price of $3,600 to Murphy which was subject to trade discount of 20% and early settlement discount of 5% if the invoice was paid within 8 days. The normal credit period available to credit customers is 30 days from invoice date. Murphy does not normally pay early to take advantage of early settlement terms. If, as expected, Murphy does not pay within the settlement discount period, what accounting entries should be made by XYZ Co and Murphy to record settlement of the amount outstanding? 7. XYZ Co sold goods with a list price of $1,400 to Pizza Co which was subject to trade discount of 10% and early settlement discount of 5% if the invoice was paid within 7 days. The normal

Jul 17, 2026

Uploaded by Asher